Rates in area vary widely

Some pay among nation's highest rates, company study says

Auto insurance

May 21, 1999|By Shanon D. Murray | Shanon D. Murray,SUN STAFF

The rates Baltimore-area drivers pay for the same six-month car insurance policy vary by as much as $764, the second-highest figure in the nation, according to a survey commissioned by one of the state's largest car insurance providers.

And even though some experts said those numbers are overstated, the survey points out the need to do comparison shopping when looking for auto insurance, said Progressive Auto Insurance, which released the findings yesterday.

Nationally, six-month rates varied an average of $481. The Baltimore area ranked second behind the Houston metropolitan area, whose rates varied $838. New York City ranked last among large metro areas with a variance of $241, the survey said.

But some industry analysts question the findings.

"The insurance industry is a competitive market where price is the key. The marketplace would not allow that sort of divergence in rates," said Hugo Warns, an insurance industry analyst with Legg Mason Wood Walker Inc. in Baltimore.

"A wide variance in the industry would be 10 percent. I could believe rates vary by $100 or $200," he said.

"I do believe Progressive has the best intentions, but it's really hard to compare rates on an apples to apples basis."

While car insurance rates vary from state to state, they also vary from county to county within a state. Baltimore City historically has high insurance rates compared with the suburbs.

In fact, while the rates in the Baltimore metro area vary by $764, the statewide variance is nearly $100 less, at $670, the survey said.

Progressive compared its prices with three of the state's largest auto insurers -- Allstate, Nationwide and State Farm. Progressive obtained rate information for its competitors from public rate filings with the Maryland Insurance Administration, the company said.

Ralph Nader, a national consumer advocate, has lent his support to the survey, saying car insurance is a high-ticket item for consumers that deserves attention.

"I've always urged the insurance industry to give us these kind of figures. But very few companies have the nerve to do it," said Nader, head of the Corporate Accountability Research Group in Washington.

"If they don't come in at the lowest, they don't want to bring the public attention to their competitors.

"We know there's red-lining, price gouging and arbitrary classifications when it comes to car insurance," he added. Such surveys "make the point that if consumers shop around, they can save money."

Comparison shopping is imperative, especially in Maryland, where more than 160 companies offer coverage, said Ed Combs, Progressive's general manager in Baltimore.

"Consumers don't shop for rates because insurance is an intimidating subject," Combs said. "The other big deterrent is people believe the price difference between companies is small."

Combs said during the survey, Progressive sometimes ranked as the highest rate, other times as the lowest.

Insurance companies set rates according to their own claim experiences, said Dave Hurst, spokesman for State Farm. The Illinois-based company is the largest car insurance company nationally with 20 percent market share, compared with Progressive's 3 percent, analysts said.